If you've been denied credit in the past, you may think securing a loan or a mortgage is out of your reach. However, you have more borrowing options than you might imagine, including the following five accessible personal loan options.
Home equity line of credit
If you already own a home, and have equity in it, you might want to consider getting a home equity line of credit (HELOC). Doing this is not without risks since you are putting your home up as collateral, but this also lowers the risk of the loan and makes it easier to qualify even with a poor credit score. But if your need for a loan outweighs your aversion to that risk, it is possible to secure a tax-deductible line of credit at a reasonable interest rate, with no restrictions on how you spend the money.
You will need a loan-to-value (LTV) ratio of about 80 percent in order to qualify for a HELOC, meaning you need to have an equity stake in your home of 20 percent. Sound like steep qualifying terms? Even if you had good credit, most lenders would still require an LTV of 80 percent.
Fortunately, the housing market has recovered significantly since the 2008 mortgage crisis. Even if you were once underwater in your mortgage, you may find that you now actually have equity in your home. How much equity? If you don't want to spend money on a formal appraisal, you may be able to get estimates it by doing a little online research at sites like Zillow and Trulia.
If you do find yourself able to qualify for a loan, be sure to comparison shop to ensure that you're getting the lowest HELOC rate available to you before you sign on the dotted line. As with most less-than-perfect-credit loans, interest rates on HELOCs tend to run higher.
Muhammad Yunus (Chittagonian, Bengali: মুহাম্মদ ইউনুস, pronounced Muhammôd Iunus; born 28 June 1940) is a Bangladeshi economist and founder of the Grameen Bank, an institution that provides microcredit (small loans to poor people possessing no collateral) to help its clients establish creditworthiness and financial self-sufficiency. In 2006...
Richard Bitner (born 1966 in Los Angeles) is an American author and publisher in the mortgage loan industry.
A subprime lender, Bitner collaborated with mortgage brokers from 2000 to 2005. Bitner and his friends started a mortgage business, Plano-based Kellner Mortgage Investments, in September 2000. Kellner was funded through a $175,000...